28 February 2005 09:05 [Source: ICIS news]
SINGAPORE (CNI)--The volume of polyethylene (PE) and polypropylene (PP) smuggled into the Philippines was estimated at around 250 000 tonne/year, or about half of the country's total annual polymers imports, an official from the Ministry of Trade and Industry told CNI on Monday.
A high percentage of PE and PP imports into the Philippines are smuggled because end-users want to avoid the high 10% import tariff levied on polymers, an industry source said. Import tax for finished plastic products is only 5%, and olefins imports are not taxed.
"Polymer end-users have to pay a 10% tax for their raw material imports, and compete with finished plastic product imports which have a 5% import tax," he added.
The source claimed that some end-users opted for smuggled imports over the local production because of quality issues.
The ministry official said that the smuggled volume estimate could be higher if it includes other polymers such as polystyrene (PS).
The ministry official and industry sources said that many smugglers sidestepped the local customs either by not declaring the cargo, or misclassifying the cargo as a product with a lower import tax such as one of the finished plastic products.
"It is hard for the customs officials to keep track of all the cargoes coming into the country. Also, the officials are not properly trained to make out the differences among the various petrochemical products," the ministry official said. The Philippines has more than 1000 plastics producers.
To counter the large-scale smuggling, the government set up an anti-smuggling committee to address the issue last month, he said.
"We are looking at getting rid of the bonded warehouses around the country. Most smuggled shipments go into these warehouses," the official said.
Also, the ministry is also looking at assigning proper codes for petrochemical products to deter smuggling activities, he said.
Meanwhile, the government has extended the 10% import tariff for polymers for six months until the end of June to protect the local polymer producers and give JG Summit Petrochemical more time to firm up its naphtha cracker plan.
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